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Allison Transmission Holdings (ALSN)
NYSE:ALSN
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Allison Transmission Holdings
(NYSE:ALSN)74Outperform
Positive Factors
Earnings
The positive stock reaction is expected due to ALSN's 3Q24 EPS beat and raised 2024 outlook.
Operational Strength
Sales in North America On-Highway were excellent, showcasing operational strength and robust demand.
Negative Factors
Financial Performance
Allison's initial 2025 outlook is 4% below consensus expectations, as pricing gains are offset by a decline in volume.
Market Challenges
Weaker Off-Hwy is driven by a well-supplied NA Oil and Gas market limiting new rig builds.
Allison Transmission Holdings (ALSN) vs. S&P 500 (SPY)
Market Cap
$8.21B
Dividend Yield1.02%
Average Volume (3M)764.36K
Price to Earnings (P/E)11.8
Beta (1Y)0.92
Revenue Growth6.26%
EPS Growth12.62%
CountryUS
Employees4,000
SectorConsumer Cyclical
Sector Strength53
IndustryVehicles
Share Statistics
EPS (TTM)8.31
Shares Outstanding85,518,295
10 Day Avg. Volume781,879
30 Day Avg. Volume764,363
Financial Highlights & Ratios
PEG Ratio0.93
Price to Book (P/B)N/A
Price to Sales (P/S)2.60
Price to Cash Flow (P/CF)9.90
P/FCF Ratio9.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$107.83Price Target Upside12.29% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering6
Allison Transmission Holdings Business Overview & Revenue Model
Company DescriptionAllison Transmission Holdings, Inc. is a leading designer and manufacturer of vehicle propulsion solutions, including fully automatic transmissions for medium- and heavy-duty commercial vehicles, hybrid systems, and electric propulsion systems. Headquartered in Indianapolis, Indiana, Allison Transmission serves a diverse range of sectors including transportation, construction, energy, and defense, providing reliable and efficient solutions to enhance vehicle performance and durability.
How the Company Makes MoneyAllison Transmission generates revenue primarily through the sale of its automatic transmissions and propulsion systems to original equipment manufacturers (OEMs), distributors, and end-users worldwide. The company's key revenue streams include sales to the commercial vehicle market, off-highway applications, and the defense sector. It also benefits from aftermarket sales, including parts and service support, which provide a stable revenue source. Strategic partnerships with vehicle manufacturers and ongoing investment in research and development for new technologies, such as electric and hybrid propulsion solutions, contribute significantly to its earnings by positioning the company to meet evolving market demands.
Allison Transmission Holdings Financial Statement Overview
Summary
Allison Transmission Holdings demonstrates a robust financial position with strong revenue growth, profitability, and cash flow generation. The company maintains effective leverage management with a solid equity base, though attention may be needed on total liabilities. Overall, the financial health appears sound, supporting future growth and operational stability.Income Statement
Allison Transmission Holdings shows strong financial performance with consistent revenue growth, as evidenced by a 6.26% increase in TTM revenue compared to the previous year. The company maintains impressive profitability with a high gross profit margin of 47.20% and a net profit margin of 22.66% in the TTM. EBIT and EBITDA margins are robust at 30.77% and 34.47%, respectively, indicating efficient operations and cost management.85
Very Positive
Balance Sheet
The balance sheet reflects a solid equity position with an equity ratio of 30.95%. The debt-to-equity ratio is manageable at 1.45, which suggests a reasonable level of leverage. Return on Equity (ROE) is strong at 44.27%, highlighting effective use of equity to generate profits. However, the company's total liabilities are substantial, which could pose risks if not managed carefully.78
Positive
Cash Flow
Cash flow performance is excellent, with a significant free cash flow growth rate of 11.23% in the TTM. The operating cash flow to net income ratio of 1.10 indicates that the company efficiently converts net income into cash. The free cash flow to net income ratio of 1.00 further supports the company's strong cash-generating capability, providing flexibility for investments and debt repayments.90
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.55B | 3.23B | 3.04B | 2.77B | 2.40B | 2.08B | Gross Profit |
| 1.20B | 1.53B | 1.47B | 1.30B | 1.15B | 998.00M | EBIT |
| 622.00M | 992.00M | 919.00M | 608.00M | 669.00M | 382.00M | EBITDA |
| 875.00M | 1.11B | 1.08B | 948.00M | 828.00M | 696.00M | Net Income Common Stockholders |
| 463.00M | 731.00M | 673.00M | 531.00M | 442.00M | 299.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 781.00M | 781.00M | 562.00M | 232.00M | 127.00M | 310.00M | Total Assets |
| 5.34B | 5.34B | 5.03B | 4.67B | 4.46B | 4.48B | Total Debt |
| 2.41B | 2.41B | 2.52B | 2.51B | 2.51B | 2.51B | Net Debt |
| 1.63B | 1.63B | 1.97B | 2.27B | 2.38B | 2.20B | Total Liabilities |
| 3.69B | 3.69B | 3.79B | 3.80B | 3.82B | 3.72B | Stockholders Equity |
| 1.65B | 1.65B | 1.23B | 874.00M | 634.00M | 756.00M |
| Cash Flow | Free Cash Flow | ||||
| 437.00M | 801.00M | 659.00M | 490.00M | 460.00M | 446.00M | Operating Cash Flow |
| 593.00M | 801.00M | 784.00M | 657.00M | 635.00M | 561.00M | Investing Cash Flow |
| -211.00M | -147.00M | -129.00M | -183.00M | -212.00M | -111.00M | Financing Cash Flow |
| -492.00M | -427.00M | -332.00M | -367.00M | -604.00M | -335.00M |
Allison Transmission Holdings Technical Analysis
Negative
96.03
Price Trends
108.68
Negative
109.72
Negative
96.52
Negative
Market Momentum
-3.87
Positive
34.22
Neutral
22.43
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALSN, the sentiment is Negative. The current price of 96.03 is below the 20-day moving average (MA) of 101.22, below the 50-day MA of 108.68, and below the 200-day MA of 96.52, indicating a bearish trend. The MACD of -3.87 indicates Positive momentum. The RSI at 34.22 is Neutral, neither overbought nor oversold. The STOCH value of 22.43 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALSN.
Allison Transmission Holdings Risk Analysis
Allison Transmission Holdings disclosed 27 risk factors in its most recent earnings report. Allison Transmission Holdings reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Allison Transmission Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $488.91M | 3.02 | 11.18% | 9.05% | -11.02% | -51.66% | |
74 Outperform | $8.21B | 11.80 | 50.69% | 1.02% | 6.26% | 12.62% | |
72 Outperform | $47.04B | 12.06 | 41.27% | 2.09% | 0.14% | 444.36% | |
64 Neutral | $2.03B | ― | -3.92% | 2.86% | -2.57% | -248.28% | |
62 Neutral | $549.10M | 16.24 | 5.79% | ― | 0.75% | ― | |
62 Neutral | $6.52B | 19.83 | 6.46% | 1.48% | -11.10% | -46.32% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
ALSN
Allison Transmission Holdings
96.03
21.44
28.74%
AXL
American Axle
4.59
-1.99
-30.24%
BWA
BorgWarner
29.85
-2.26
-7.04%
CMI
Cummins
334.24
70.22
26.60%
DAN
Dana Holding
13.52
1.69
14.29%
TEN
Tsakos Energy Navigation
15.70
-6.55
-29.44%
Allison Transmission Holdings Earnings Call Summary
Earnings Call Date: Feb 11, 2025 | % Change Since: -15.68% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong overall performance with record net sales and strategic growth in new markets and products. The company demonstrated solid financial management with debt reduction and shareholder returns. However, challenges included a decline in adjusted EBITDA and free cash flow, as well as flat growth expectations in the outside North America on-highway market.Highlights
Record Net Sales and Revenue Growth
Allison Transmission achieved all-time high net sales of $3.2 billion for the year 2024, with a 15% increase in the North America on-highway market. The defense end market saw a 28% increase in sales, reaching $212 million, and outside North America on-highway sales reached a record $493 million.
Strong Financial Performance
Full year earnings per share increased to a company record diluted EPS of $8.31, up 12% from 2023. Q4 net sales increased 3% year-over-year to $796 million, with a gross profit increase to $373 million.
New Product Launches and Strategic Partnerships
Allison introduced the 6,000 series transmission for widebody dump trucks and announced a partnership with XCMG for the TerraTran transmission in the XG110 WBD trucks.
Debt Reduction and Shareholder Returns
Paid down over $100 million of term loan debt, maintaining a net leverage ratio of 1.4x. Returned cash to shareholders through dividends and share repurchases, with over $500 million of repurchase authorization remaining.
Lowlights
Adjusted EBITDA Decline
Adjusted EBITDA for Q4 2024 was $270 million, compared to $277 million for the same period in 2023.
Decreased Free Cash Flow
Adjusted free cash flow for the quarter was $136 million compared to $186 million for the same period in 2023, driven by lower net cash provided by operating activities and higher capital expenditures.
Flat Guidance for 2025 Outside North America On-highway Market
Despite efforts to increase penetration, the company expects flat growth in the outside North America on-highway market for 2025.
Company Guidance
During the call, Allison Transmission provided guidance for the full year 2025, projecting net sales in the range of $3.2 billion to $3.3 billion, driven by 400 basis points of price realization, increased demand for track vehicle applications, and robust North American vocational demand. They expect net income between $735 million and $785 million, with adjusted EBITDA ranging from $1.170 billion to $1.230 billion. The company forecasts net cash provided by operating activities between $800 million and $860 million, capital expenditures between $165 million and $175 million, and adjusted free cash flow in the range of $635 million to $685 million. The guidance also highlights a focus on maintaining strong cash generation, strategic debt repayment, and continued capital returns to shareholders through dividends and share repurchases.Allison Transmission Holdings Corporate Events
Executive/Board ChangesShareholder MeetingsStock BuybackDividends
Allison Transmission Increases Stock Repurchase and Dividend
Positive
Feb 20, 2025
On February 19, 2025, Richard P. Lavin, a board member of Allison Transmission Holdings, announced he would not seek re-election due to health reasons, with no disagreements cited with the company. On February 20, 2025, Allison Transmission announced an increase in its stock repurchase program by $1 billion, bringing the total authorization to $5 billion, and an 8% increase in its quarterly dividend, reflecting a robust financial strategy and commitment to shareholder returns. The company’s annual stockholders meeting is scheduled for May 7, 2025, with a record date of March 10, 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.